4/30/2009 @ 6:00AM

Oracle's Java Problem

BURLINGAME, Calif. — The Java computing language has finally proven to be the money-maker that
Sun Microsystems
always insisted it would be. Everyone, except perhaps
Oracle
shareholders, should be happy.

When Sun engineers developed Java in the mid 1990s, it was a solid if not astounding advance in the art and science of computer programming. Java’s creators borrowed ideas from the widely-used language known as C, but made a couple of important modifications, like baking in better security features. Left to its merits, Java would have been named the equivalent of “Language of the Year, 1995″ by computer professionals, but not much more.

What turned Java from a modest evolution in computer language to a full-scale business phenomenon was savvy marketing by Sun. Since Java emerged at the same time as the World Wide Web, Sun did everything it could to make the two synonymous. Java, said Sun, was what would make the Web come alive. Anything that wasn’t plain vanilla text was going to be Java, from spinning logos all the way up to Web sites that worked just like desktop computer programs.

It was a good story, and the world bought it. This, despite the fact that it was not entirely dissimilar from what already existed, Java remained quite hard to work with. Then, as now, you needed to be a highly trained programmer to make heads or tails of the language.

Still, Java was smashing PR for Sun, and for two interlocked reasons. The company’s actual business was selling computers–in those days, mostly expensive servers. Since computers tend to be more alike than different, Sun used Java to differentiate its machines as being especially Internet-ready.

Java was also extremely useful because it caused investors to perceive Sun much more as a software company than it really was. Wall Street accords much higher multiples to software than to hardware, on account of software’s presumed higher profit margins. Which is why much of the 50-fold increase in Sun’s share price between 1995 and 2000 was due to the perception, keenly cultivated by Sun, that it was a software company and that Java was its flagship.

Sun executives always had long lists of the way Java was going to make them money, starting with licensing fees and working up the computing food chain. The best evidence for the hollowness of that story is that Sun’s stock price is now back at levels close to what it was in 1995. Java never emerged as anything close to the money-maker Sun said it would be.

And while Java certainly serves a secure niche, it also didn’t turn out to be nearly as influential in the tech world as Sun insisted it would be. Talk to computer developers these days, and you’ll hear about languages like Python and Ruby on Rails, but not much about Java. Back in Java’s early days, Netscape jumped aboard the bandwagon by renaming to “Javascript,” the language built into its then-popular browsers. It needn’t have bothered; today, Javascript is far more popular than Java, even though the two have nothing in common.

Java’s main value for Sun continues to be the warm PR glow it gives the company. The company switched its ticker symbol from SUNW to JAVA in 2007, hoping to re-ignite Java fever. It didn’t work; neither did the four-for-one reverse stock split the company engineered.

Java performed its final bit of service for Sun shareholders earlier this month, when
Oracle
made the surprise announcement that it would be buying the company.

It’s not likely that investors would have had much patience with Oracle buying a failing hardware company in an old-boy network styled deal, which is essentially what happened. And so Larry Ellison talked up Sun as a software company, saying that Java is the most important piece of software Oracle has ever purchased.

This may be true, but is of no importance. Despite being at the very center of the Java Web bubble, Sun was never able to make money with the software. Nor could it continue to use Java to disguise the fact that it hadn’t been able to successfully shift from one hardware business model to another. What reason is there to think Oracle could possibly fare any better?